ESDS Managed Services More Than Doubled, Reshaping FY26 Mix

ESDS managed-services revenue increased 157.2% to Rs 194.591 crore in Fiscal 2026 from Rs 75.650 crore in Fiscal 2025, reshaping the company’s revenue mix. Managed services accounted for 41.21% of revenue from operations, up from 20.94%, and moved close to infrastructure as a service, or IaaS, at 43.88%.

How did ESDS’s FY26 revenue mix shift toward managed services?

ESDS’s Fiscal 2026 revenue mix shifted toward managed services because revenue from that line rose by Rs 118.941 crore, exceeding the Rs 110.875 crore increase in total revenue from operations. Managed services’ share of revenue increased by 20.27 percentage points to 41.21% in Fiscal 2026 from 20.94% in Fiscal 2025. IaaS fell to 43.88% of revenue from 56.36%, while software as a service, or SaaS, fell to 14.91% from 22.71%.

The shift reflects the relative growth rates of the three service lines rather than a decline across all other operations. IaaS revenue increased to Rs 207.197 crore in Fiscal 2026 from Rs 203.641 crore in Fiscal 2025, but managed services expanded far faster. SaaS revenue declined to Rs 70.422 crore from Rs 82.044 crore, while total revenue from operations reached Rs 472.210 crore, compared with Rs 361.335 crore a year earlier.

Did ESDS managed services first overtake SaaS in Fiscal 2026?

No. ESDS managed-services revenue exceeded SaaS revenue in Fiscal 2024, Fiscal 2025 and Fiscal 2026, although the gap widened substantially in Fiscal 2026. Managed services were Rs 10.642 crore above SaaS in Fiscal 2024 and Rs 6.394 crore above SaaS in Fiscal 2025. In Fiscal 2026, the difference expanded to Rs 124.169 crore as managed-services revenue reached Rs 194.591 crore and SaaS revenue was Rs 70.422 crore.

The Fiscal 2026 change was driven by the acceleration in managed services after a prior-year decline. Managed-services revenue declined 2.4% from Rs 77.539 crore in Fiscal 2024 to Rs 75.650 crore in Fiscal 2025, before increasing 157.2% in Fiscal 2026. SaaS followed the reverse direction, rising from Rs 66.897 crore in Fiscal 2024 to Rs 82.044 crore in Fiscal 2025 before declining 14.2% in Fiscal 2026.

Managed services are defined by ESDS as ongoing IT infrastructure, cloud, security and operational support delivered through subscription or contract-based models. The portfolio includes cloud and data-centre managed services, cybersecurity and compliance, network management, backup and disaster recovery, database administration, and managed DevOps, which combines software development and operations. The Fiscal 2026 mix would depend on managed-services revenue continuing to grow faster than the other service lines.

What happened in ESDS’s IaaS and SaaS businesses?

ESDS’s IaaS revenue grew in Fiscal 2026, but its revenue share declined because managed services grew at a much higher rate. Cloud services and cloud computing generated Rs 167.890 crore in Fiscal 2026, up from Rs 166.316 crore in Fiscal 2025. Colocation and data-centre services generated Rs 39.307 crore, compared with Rs 37.325 crore in Fiscal 2025.

IaaS refers to cloud-based computing resources, including servers, storage and networking, supplied on subscription or pay-per-use terms, as well as colocation income. ESDS operated five data centres in India at the end of Fiscal 2026, compared with four at the end of Fiscal 2025, and has operated five centres since October 2025. The five facilities cover more than 75,266 square feet and are stated to provide uptime of at least 99.95%, supported by power redundancy and disaster-recovery services.

SaaS accounted for 14.91% of Fiscal 2026 revenue, down 7.80 percentage points from Fiscal 2025 and 8.44 percentage points from Fiscal 2024. ESDS defines SaaS as cloud-based software applications supplied under subscription or pay-per-use arrangements. Its listed offerings include data-centre monitoring software, vulnerability scanners, web application firewalls, virtual private network connectivity and the SPOCHUB digital marketplace.

Which customer changes accompanied ESDS’s new revenue mix?

ESDS’s Fiscal 2026 growth coincided with a larger customer base and a higher contribution from customers acquired during the year. Total customers increased to 2,501 in Fiscal 2026 from 1,714 in Fiscal 2025 and 1,465 in Fiscal 2024. New customers contributed 27.37% of Fiscal 2026 revenue, compared with 23.37% in Fiscal 2025, while existing customers’ contribution declined to 72.63% from 76.63%.

Average revenue per customer declined to Rs 18.90 lakh in Fiscal 2026 from Rs 21.10 lakh in Fiscal 2025, after Rs 19.60 lakh in Fiscal 2024. ESDS attributed the decline principally to the addition of 787 customers in Fiscal 2026 that were at early stages of engagement and had not reached their full revenue potential. Revenue retention, defined as revenue from existing customers in the current year divided by the previous year’s revenue from operations, was 94.92% in Fiscal 2026, compared with 96.63% in Fiscal 2025.

Enterprise customers became ESDS’s largest customer-industry category in Fiscal 2026, generating Rs 260.162 crore, or 55.09% of revenue from operations, compared with Rs 143.117 crore, or 39.61%, in Fiscal 2025. Government revenue increased to Rs 129.258 crore from Rs 106.684 crore, but its share fell to 27.37% from 29.52%. Banking, financial services and insurance, or BFSI, revenue declined to Rs 82.790 crore from Rs 111.535 crore, reducing its share to 17.53% from 30.87%.

What could affect ESDS’s revenue mix after Fiscal 2026?

ESDS has disclosed an Australia-based artificial intelligence, or AI, cloud infrastructure agreement that could affect its later cloud and managed-services revenue. The agreement, entered on March 31, 2026 with an Australia-based neocloud AI compute service provider, has an initial five-year term and an option for a further two years. Its aggregate contract value is approximately Rs 11,831.250 crore, based on the stated exchange rate of Rs 94.65 per US dollar as at March 31, 2026.

The agreement requires deployment and operation of a dedicated AI infrastructure cluster at an existing Australian data-centre facility. The cluster is expected to include about 8,208 NVIDIA B300 graphics processing units, or GPUs, along with storage infrastructure. ESDS has stated that delivery is targeted by September 2026 and revenue generation is expected to begin in the third quarter of Fiscal 2027, with monthly service fees payable under the agreement.

Conclusion

ESDS reported a substantial Fiscal 2026 revenue-mix shift as managed services rose from 20.94% to 41.21% of revenue from operations. The increase resulted from managed-services revenue growing by Rs 118.941 crore, while total revenue from operations grew by Rs 110.875 crore. IaaS remained the largest service line at 43.88%, but SaaS declined to 14.91% of revenue.

The disclosed AI cloud infrastructure agreement is the next development to watch because it is expected to begin generating revenue in the third quarter of Fiscal 2027. Its effect on ESDS’s mix will depend on infrastructure delivery by the September 2026 target, the commencement of monthly service fees and the classification of resulting revenue between cloud and managed-services offerings.